Every day, people eyeing the marijuana business ask for free help. Here’s a hypothetical of the most extreme calls, which play out like a bad sitcom:
[answering] Attorney speaking.
Male Caller: The city wants $9,000 for a grow license. Do you guys give loans?
Attorney: Excuse me? This is a law office.
Male Caller: I know. Just for now. A Kumquat cracked my windshield. It fell off this tree with extra gravity…and BAM. You do insurance claims too, right? I’ll pay you back from your cut.
Attorney: Who is this?
Male Caller: That’s “need to know” information?
Attorney: OK, I need to know. I don’t discuss any laws, including the laws of gravity, with non-clients.
Male Caller: Then give me an anonymous appointment. It’s free, right?
Attorney: An anonymous appointment?
Male Caller: You know…Today, I only tell you my initials. Then, when we meet, I wear a hood to protect my identity.
Attorney: I charge for the initial consultation. I’m also not sure if I’m allowed, ethically, to advise a masked man? That research will cost you another $500. But on the upside, we do validate parking.
Male Caller: Cash? Sorry man, I’m tapped. Can’t you just help me out this once? I’ll make it up to you.
Attorney: OK, here’s my best, complimentary advice: It takes a lot of money to start a grow operation. You have none. Go find some, and then call me back.
Male Caller: I already told you, we’re doing my insurance claim. Until then, you can invest in my grow. We’ll do it together.
Attorney: So, you’re offering me an enigma?
Male Caller: Why, do you need one?
Attorney: A catch-22. I’m putting up our entire investment, right? Then I’m using my money, to pay myself attorney’s fees, to make you my partner. Is that the offer?
Male Caller: Well, yeah but…
Attorney: Next, I’m spending all of my time on your $1,000 fruit case – where the total damages are probably less than your deductible. And if by chance it settles, I keep $400 to offset the massive
attorney’s fees I’ve already paid myself on your behalf. Correct?
Male Caller: Well, sort of. I was thinking more like $330. But I’m negotiable.
Attorney: Finally, I use the rest of my investment to run our business by myself, while you sit at home, watch tv, and collect half of the profits?
Male Caller: Now that’s just wrong. And unfair. I don’t just sit around all day watching tv. Sometimes, I stand up.
Attorney: How old are you?
Attorney: I think you misdialed. Sounds like you meant to call your Mother.
What you can learn from this story
Likely every marijuana lawyer has gotten at least one similar call. This fake scene demonstrates why seeking free legal advice a) is incompatible with starting a pot business, and b) should never be requested while you’re stoned.
Let’s start with b). California’s pot laws are highly complex, so understanding them takes a clear head. Misinterpreting advice can lead to serious consequences for the caller, and potential malpractice exposure for the lawyer.
Cannabis compliance is not a game. The federal government considers it completely illegal. California, its cities, and counties deem it partially legal. Any misstep could result in a steep fine, incarceration, or even losing custody of one’s children. No lawyer should be giving meaningful advice, especially at no charge, to someone who’s clearly too high to process it. And no potential client, who’s serious about getting into the business, should request it while compromised. The risk to the law firm’s credibility, and the recipient’s health, safety, and welfare, are simply too great. Further, the names of callers willing to create such peril spreads around fast between the lawyers. It’s never good to be on that blacklist. The cardinal rule for seeking pot-related legal advice is: Call first. Toke later.
As for part a): Marijuana law is a niche practice. Right now, there are more Californians seeking advice than qualified attorneys to give answers. It is a formidable task for a law firm to get up to speed. There are federal, state, and local rules to learn, many of which conflict. Since the law also changes frequently, daily updates are mandatory. That prep work has value.
Which makes the next point. In this area, there are tons of simple questions, but few simple answers. The state’s regulatory scheme works more like a house of mirrors. The perspective looks different from every angle.
For example, here’s a basic question: “Can I grow pot for personal use and sell the overage to my friends?” Just some of the regulations to consider include:
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The Compassionate Use Act (Prop 215, 1996), SB 420 (Medical Marijuana Program Act), the Medical Cannabis Regulation and Safety Act (2015), and AUMA (2016). The California Legislative Information website allows a search of code sections by key words. Typing in ‘marijuana or cannabis’ brings up 200 different code sections. Plus, there’s a large body of court cases interpreting these statutes.
Every city and county can make its own rules, so long as they are not superseded by state law. Where does the caller live?
Are medical marijuana cultivation and/or sales completely banned there?
If so, has the city/county altered its ban in accordance with the AUMA?
- If sales of personal use overage are allowed,
- Must it be reported to the city/county? Are taxes payable on the sale?
- Can it be for profit?
- Are permits, fees, and other evidence of city/county compliance required?
- What restrictions, if any, must be followed in the cultivation (i.e. utility use, indoor v. outdoor, residential v. commercial location, zoning considerations, etc.)?
In the end, the laws are so voluminous, any short, free answer will almost certainly be incomplete.
Let’s be realistic
The days of getting rich on the cheap are long gone. If someone’s budget is so constrained, s/he must avoid paying for legal guidance, it’s time to pick a different line of work. Pot is now one of most regulated businesses in California. Usually, the most knowledgeable lawyers, who can also be the most expensive, help avoid the biggest problems.
Cannabis entrepreneurs experienced this in Desert Hot Springs several years ago:
Many illegal growers were anxious to come out of the shadows, and the city was on the verge of bankruptcy. So, it made collective sense to legalize cultivation. The rumor that permits would be issued caused developers to descend on the town. Before legalization was even in place, the prices of bare land had tripled. Many parcels had little or no access to water or electricity. They still got snapped up almost immediately.
Because of the city’s budget crisis, solutions to these problems were years down the line. Many buyers ended up sitting on overpriced sand that would stay fallow unless they trucked in water and used a diesel generator. Those infrastructure costs were exorbitant. Legend has it that several high rollers jumped in without seeking or heeding legal advice, and promptly lost a small fortune.
Is it worth risking one’s life savings, reputation with investors, and potential bankruptcy to avoid paying for advice that could have avoided these problems? Surprisingly, some people think it is. They see Desert Hot Springs as more of an anomaly than a cautionary tale. Experienced attorneys know that massive, hidden costs are the norm. They’re also not going to disclose information about it at no charge.
Last, contrary to popular belief, attorneys are people too. Studies show that primates who don’t reciprocate get shunned by the entire group. It’s part of our DNA. No one likes to feel used or treated like their services have no value. All a lawyer has to sell is his/her advice. A caller who behaves like it’s worthless, or should be meted out for free, will trigger the basal, primate response.
This means, if there’s any answer at all, it’s likely to be cursory, and contain an admonition like “the law generally works this way. But it’s complex. You are not my client, and this is not legal advice. Rely on this information at your own risk.” Anyone who acts on it anyway is playing with fire.